Sleeves are "short" on work shirts (relative to say, dress shirts) so that you can work with your hands without the cuffs constantly getting in the way, or more disastrously, getting caught in a piece of machinery and taking your arm with it...
In other words, the shirt looks correct, nice find!

Vintage Engineer Boots recently spotlighted John Lofgren's engineer boots, and more specifically the new batch of Badalassi engineers currently under production. Some really nice pics of the unfinished product: